On Appeal from the District Court of the Virgin Islands for the Division of St. Thomas, (D.C. Civil Nos. 88-0015 & 88-0037).

Hutchinson, Cowen and Garth, Circuit Judges.

Author: Garth

Opinion OF THE COURT

GARTH, Circuit Judge:

This appeal arises out of a dispute between a land developer and several residents of certain beach-front properties in Smith Bay, St. Thomas, Virgin Islands.

The Coastal Zone Management Committee ("CZM") had granted a permit to Pelican Beach Properties, Inc. ("Pelican") to construct a sixty-unit "beach club" on property that is subject to a number of restrictive covenants. The Board of Land Use Appeals ("Board") in turn affirmed the permit grant. Despite the fact that the district court (Christian, J.) found a number of improprieties in the review process as conducted by the Board, the district court upheld the granting of the permit by the CZM based on its conviction that the CZM decision was supported by substantial evidence. John and Myriad Maitland and Francis McCarthy, Jr. ("McCarthy") appeal from that district court order.

Among other problems, this appeal involves the district court's failure to observe the structural hierarchy of fact finding and decision making mandated by the statutes of the Virgin Islands which authorized the establishment of the Coastal Zone Management Commission and the Board of Land Use Appeals. The district court, apparently in disregard of that structure, ignored the exclusive fact-finding responsibilities of the CZM by undertaking its own fact-finding ventures. It then ignored the Board's exclusive duty to review the CZM's findings, and, in an apparent attempt to make up for the deficiencies of both the CZM and the Board, the district court essentially usurped the province of each and of both. We reverse.

I.

A.

In 1957 Peter and Eleanor Maas ("Maas") sold parcels 11B and 12 to Pelican Beach, Inc. ("Old Pelican" -- no relation to the appellee/defendant Pelican). The deed contained a covenant that expressly prohibited the construction of a "hotel or guesthouse" and permitted "residential use only" or "use by a first-class well conducted beach club or for the construction of attractive substantial rental cottages as residences."

This "no-hotel" covenant stated that:

...the land conveyed in this deed by the parties of the first part (Maas) to the party of the second part (Pelican, Inc.) shall not be sold at anytime by the party of the second part, its successors and assigns for hotel or guest house construction and may be sold only for residential use, or for use by a first-class, well conducted beach club, or for the construction of attractive substantial, rental cottages as residences, and the enforcement of this provision is considered of the utmost importance by the parties of the first part and of the essence in this deed, enforceable by injunction and other legal relief in its violation.

"Old Pelican" further subdivided and sold the property attaching further covenants restricting the land to "single-family" residences and prohibiting any beach or bathing operation for commercial purposes or for use by the general public.*fn1

The "Old Pelican" Beach Club purchased 11-B and in the 1960s built "Old Pelican" on a portion of 11-B. It consisted of 23 units, comprised of 11 buildings, primarily of one-bedroom and two-bedroom cottages separated from each other. The remainder of parcel 11-B and parcel 12 were subdivided and sold. Each deed of sale was subject to the "no hotel" covenant and the "single family" and "beach club" covenants.

The club was open a few months of the year. There was parking for 20 cars. In keeping with the restrictions, the club did not solicit the patronage of the public at large, and owners of the residences that surrounded the club were barred from the club's premises absent permission. The deeds of the surrounding residential parcels provided that while the neighbors had a perpetual easement to the beach, they did not have the right to use the beach club facilities.

The Maitlands purchased parcel 11B-7 on November 13, 1979 (A52). The McCarthys purchased parcel 12D-2 on April 29, 1980 (A55).

B.

In 1985 Robert Cummings, owner of "Old Pelican," sold the club and some adjacent parcels to appellee Pelican. Pelican proposed to tear down the "Old Pelican" Beach Club and build a 68-unit "Pelican Beach Hotel". This plan encountered opposition at the first public hearing on February 3, 1987 before the CZM. Subsequently, Pelican submitted a modified application in response to protests that the permit would violate certain restrictive covenants. The modified plan for a 66-unit beach club was then termed the "Pelican Beach Club" plan. Subsequently, as a result of opposition, the plan was again modified, this time to 60 units. Finally, the CZM conducted another public hearing and voted to grant Pelican a permit.

On June 25, 1987, the CZM published its decision with findings. It granted the permit for a 60-unit beach club consisting of 16 guest room buildings of no more than 5 units each, a main building including a lobby/reception area, a lounge, a dining area seating 120, and meeting rooms with a 100-seat capacity. The permit also approved a manager's residence and a reverse osmosis/sewage treatment/emergency power generator facility also housing electric and telephone switching equipment, laundry, office and storage spaces. (App. I 70-82)

On August 7, 1987, McCarthy filed an appeal with the Board. On October 20, 1987 the Board held a public hearing attended by all interested parties.

On October 28, 1987, the Board held an Executive Session meeting that was not attended by McCarthy, who had received no notice of the meeting, but which was attended by Winston Hodge, Pelican's counsel, and Robert deJongh, Pelican's architect. At the meeting ex parte material was submitted and arguments and comments were made by Pelican's representatives. At the conclusion of the meeting, the Board voted 4 to 1 to affirm the permit.

On December 14, 1987, the Board's written decision affirming the CZM was published. The Maitlands and McCarthy thereafter petitioned the district court for review of the Board decision. The district court consolidated the two cases. Accordingly, for ease of ...

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